Summary:
- All-time highs seen in US indices
- Fall in US inflation weighs on USD
- Fed chair rumours move the markets
- Euro rises despite lower inflation
Today marks the final trading session of Q3 with US stock markets having enjoyed yet another impressive performance. Records have fallen in all three major US indices and the rally that began last November following the US election has shown little sign of stopping. The bullish mood is stocks isn’t confined to just the US with the UK100 and DE30 both joining in today’s rally.
The US dollar has been gaining over the past week but today the buck is a little mixed. The Fed’s preferred measure of inflation, the core PCE price index, has fallen for the month of August, in a development that could see the central bank a little more reluctant to hike rates. A year on year reading of +1.3% was below the +1.4% expected (which would have been inline with the prior reading) and continues a run of significantly below target inflation amongst readings seen for much of the year.
The data release saw an immediate drop in the greenback, but there has been something of a recovery into the European close with rumours surrounding the next Fed chair seeing some USD buying. Several news outlets have been reporting that US president Trump has held a meeting with Kevin Warsh about the latter becoming the next Fed chair.
The economic outlook across the euro area seems to be uninterruptedly sturdy, one of the core elements – inflation growth – remains sub-par though. Consumer prices remained unchanged at 1.5% yoy in September but fell short of the estimate at 1.6% yoy. Moreover, the core measure held onto 1.1% yoy registered in August and failed the consensus at 1.2% yoy as well.
Cryptocurrencies have enjoyed a further recovery this week, although today all 5 markets are in the red. Bitcoin got another nasty report to digest this time from South Korea which seemed to take a leaf out of China’s book and proclaimed that all initial coin offerings (ICOs) would be banned in the country. The declines are only marginal on the day however with price currently around 4200.